Miami-Dade County

Florida approves 5 nurseries to grow medical marijuana

Jose “Joche” Smith, chief executive at Costa Farms, in a shade house containing thousands of indoor plants on May 18, 2011 in southwest Miami-Dade.
Jose “Joche” Smith, chief executive at Costa Farms, in a shade house containing thousands of indoor plants on May 18, 2011 in southwest Miami-Dade. FOR THE MIAMI HERALD

Five Florida nurseries, including two from Miami-Dade County, were selected Monday to cultivate and distribute the first legal marijuana in the state, opening the door to the sale of the non-euphoric strains to treat patients with seizure disorders and cancer by June of next year.

Costa Nursery Farms, of Miami, won the bid for the Southeast Region. Alpha Foliage of Homestead will grow it for the Southwest Region. Knox Nursery of Winter Garden, will grow it for the Central Region. Hackney Nursery Company of Tallahassee will grow it for the Northwest Region. Chestnut Hill Tree Farm of Alachua will be the grower for the Northeast Region.

The decision moves the state closer to implementing the 2014 law that allows for marijuana extracts that are low in euphoria-inducing tetrahydrocannabinol, or THC, and high in cannabidiol, or CBD. The law was intended to treat patients with intractable epilepsy and people with advanced cancer. To qualify for the low-THC-based cannabis treatment, patients must obtain permission from a qualified doctor and be added to the Compassionate Use Registry.

Under the law, applicants had to have been in business in Florida for at least 30 years and grow a minimum of 400,000 plants at the time they applied.

Many of the five nurseries teamed with consultants, investors, security firms, technology companies and out-of-state pot growers to develop their application. Each was chosen from a pool of 28 applicants from around the state by a panel of three state reviewers, based on rules set by a panel that included five growers.

Four of the nurseries represented on the rules committee — Costa Farms, Hackney Nursery, Chestnut Hill Farms and Knox Nursery — also were winners in the application process, immediately drawing fire from other applicants.

“Today’s award of licenses will raise serious questions about improper influence and self-dealing,” said Taylor Patrick Biehl a lobbyist for the Medical Marijuana Business Association of Florida whose consulting firm represented three of the applicants.

“Maybe they learned something the rest of us didn’t in terms of putting the applications together,” said Jeff Sharkey, who heads the Medical Marijuana Business Association of Florida. “Every applicant will be reviewing the scoring and making some decisions in terms of how to proceed.”

Each of the growers now will have 10 business days to post a $5 million performance bond to show they are serious about obtaining the license. If any of the applicants misses that deadline, the applicant with the next highest score in that region will be selected, the Department of Health said in a press release.

The clock also starts Monday for growers. The nurseries have 75 days to request cultivation authority and they must begin cultivating the low-THC cannabis within 210 days – or by June of next year.

While Costa Farms will serve the Southeast Region of the state Alpha Foliage Inc. of Homestead was awarded a license to serve Southwest Florida. That region includes Charlotte, Collier, DeSoto, Glades, Hendry, Highlands, Hillsborough, Lee, Manatee, Okeechobee and Sarasota counties.

The Alpha Foliage's marijuana subsidiary will do business as Surterra Therapeutics 1 but, because the Department of Health allowed applicants to determine what portions of their application should be redacted and inaccessible to the public, most of the company’s 1100-page application has been redacted. It is unknown where the company's facility will be located and where patients can purchase the low-THC product.

In Southeast Florida, the unsuccessful applicants included Bill’s Nursery of Homestead, Nature’s Way Nursery of Miami and Redland Nursery of Homestead.

Costa Farms has been working vigorously to win the bid since the outset. The company is the largest nursery in the state and has been in operation as a registered nursery since 1984. A last-minute amendment inserted onto the low-THC bill in 2014 by the Florida House banned any grower from applying who had not been in business since 1984 and had an inventory of at least 400,000 plants at the time of the application. Costa Farms fit that description.

When the Department of Health proposed the first rule, establishing a lottery system to select the applicants and threatening their chances of getting picked, Costa Farms sued the state and persuaded a judge that selecting providers of medical cannabis by lottery was not what the Legislature intended.

The rule was thrown out and a new rule was developed by a committee that encompassed representatives from the industry — including Costa Farms.

According to the Costa Farms application, the company will operate its marijuana business as Modern Health Concepts. It plans to convert an existing facility into a 24,000-square-foot, “fully climate-controlled ‘clean’ greenhouse” that grows plants in containers, finishing in 20-gallon pots. Organic additives will be used and pests will be controlled organically.

Plants will be carefully tracked from cultivation to distribution using a monitoring system developed by BioTrackTHC, a Fort Lauderdale-based company, the application says. The system will allow them to track every plant and keep precise inventory that allows patients to pre-order medical cannabis based on their needs.

The company disclosed that it will need a half a gallon to a gallon of water per plant per day.

Once the product is produced, it will be transported 4.6 miles to the processing facility by a refrigerated van that is retrofitted with tracking devices and video surveillance.

The company has already obtained a license to cultivate a strain it calls “Haleigh’s Hope,” similar to Charlotte’s Web, which is an anti-seizure strain named after Haleigh Cox, a 5-year-old Georgia girl who suffers from a severe seizure disorder called Lennox-Gastaut syndrome.

Patients who have approval from specially-registered doctors will be able to obtain the medical marijuana from either the dispensing facility at their production plant or through home delivery.

“We are committed to providing the safest and most effective treatment to those suffering from qualifying conditions and will work diligently to ensure its availability with as little delay as possible,” Costa Farms said in a statement.

The growers are also banking on the Legislature to expand the number of medical conditions covered by the law or passage of the more wide-ranging medical marijuana initiative that could be on the November 2016 ballot.

United for Care, the group led by prominent attorney John Morgan, is collecting signatures for the measure that would establish a constitutional right to medical marijuana for a broad range of conditions. A similar amendment in 2014 got 58 percent of the vote, short of the 60 percent needed to become law in Florida.

Patients were supposed to have access to the low-THC products on Jan. 1, when doctors who had undergone special training were supposed to begin ordering the medication, but the process has been delayed because of lawsuits and a judge’s decision last year that rejected health officials’ first attempt at implementing the law.

Sharkey said there are about 20,000 potential patients in Florida that could benefit from the low-THC cannabis, also known as “Charlotte’s Web.” But that is a small patient base for an expensive investment, he said.

Legislation is moving through the House and Senate that would expand the patient base by allowing for more medical conditions to be covered under the “right to try” state law. The measure would also allow growers to cultivate strains with higher THC levels which cancer patients say is necessary.

“There has to be a market that is sustainable,” Sharkey said. “More medical conditions and modifying the THC could expand the accessibility and the affordability.”

Mary Ellen Klas can be reached at meklas@miamiherald.com and (850) 222-3095. Follow her @MaryEllenKlas

Costa Nursery Farms

The winning bidder for the Southeast region, which includes Monroe, Miami-Dade, Broward, Palm Beach and Martin counties.

▪ Applicant: Jose I. Smith, manager, Costa Nursery Farms

▪ Operating as: Modern Health Concepts

▪ Medical director: Carlos I. Smith of Key Largo, specialist in internal medicine; back-up medical director is Jeffrey Block, a Miami anesthesiologist

▪ Managing cannabis grower: Shane Hutto, horticulturist at Colorado-based Horticultural Solutions

▪ Director of production: Michael A. Merida, Costa Farms

▪ Director of security: Tim Moore, a former commissioner at the Florida Department of Law Enforcement and a former lobbyist with the firm that represents Costa Farms, the Southern Strategy Group

▪ Property for operation: 21865 SW 162nd Ave., Miami.

▪ Dispensary locations: Production facility and home delivery

▪ Notable: Partnering with CannLabs out of Colorado, which will provide consultation to develop strains and test the potency of the marijuana. Also on the team is Luis Gonzalez, the former management director of MBF Healthcare Partners. Ownership and investor information has been redacted from public documents.

Alpha Foliage

The winning bidder for the Southwest region, which includes Charlotte, Collier, DeSoto, Glades, Hendry, Highlands, Hillsborough, Lee, Manatee, Okeechobee and Sarasota counties.

Because the Department of Health allowed applicants to determine which portions of their application should be redacted and inaccessible to the public, most of the Homestead company’s 1,100-page application has been blacked out. This much has been reported:

▪ Operating as:Surterra Therapeutics 1

▪ Co-owner: Charles “Chuck” Buster

▪ Medical director: Dr. Joseph Dorn of Monticello

▪ Reserve medical directors: Dr. Clifford Selsky of Maitland and Dr. Joseph Rosado of Pace

▪ Research and development team adviser: Dr. Ronald Aung-Din

Source: Florida Department of Health

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